The government is distancing itself from Solid Energy chairman John Palmer's suggestion for partial privatisation of the state-owned coal miner, saying the senior businessman has over-stepped the mark.Mr Palmer, who is also chairman of Air New Zealand, ar
The government is distancing itself from Solid Energy chairman John Palmer's suggestion for partial privatisation of the state-owned coal miner, saying the senior businessman has over-stepped the mark.
Mr Palmer, who is also chairman of Air New Zealand, argued that there should be a public debate about the opportunities for New Zealand.
He said Solid Energy's situation was vastly different to the emotional discussion surrounding state-owned Kiwibank, and he talked about the merits of Air NZ's ownership structure.
The airline is 75% owned by the crown, but is also listed on the sharemarket.
Mr Palmer is reported to have told Finance Minister Bill English of his intention to raise the issue at a presentation ahead of the NZX annual meeting in Wellington today.
Energy Minister Gerry Brownlee said on Radio New Zealand that Mr Palmer was expressing a personal view and the government had no information that it was a Solid Energy board position.
Mr Brownlee said Mr Palmer, who has been named company chairman of the year at the Top 200 awards, was "certainly not [expressing] the government's view."
He added: "I think he has just stepped well over the mark this morning and I'm sure no one is particularly happy with him. Mr Palmer is, of course, not an elected official, he is an appointed chairman."
The government has pledged it will not sell state assets in its first term and will signal any intention in its election policy. It also wants to shut down any discussion over ownership issues.
Mr Palmer emphasised that the comments were his own opinion and nothing he or the Solid Energy board were doing were contrary to the government's asset sales policy.
He said there should be majority government ownership of Solid Energy because it had some key national assets. The sale of new shares in the coal miner to raise capital for expansion did not require the sale of the government's existing stake but would dilute it.
Mr Palmer said he accepted the government policy of no asset sales in this term.
But he pointed out Air NZ had performed at least as well as the market, and in many respects had done better, even though its record for value creation and performance was somewhere between average and poor.
"What I would like to think is that we have proved that a model of a listed company with a majority Crown ownership can work," Mr Palmer said in the presentation.
For a company such as Air NZ, which was pursuing a strategy in a difficult sector and was viewed as an important part of this country's infrastructure, majority Crown ownership had been a bonus, Mr Palmer said.
"It allows us to take a medium-term view of strategy in terms of performance, without having to be absolutely focused on the share price day-to-day, and the question of whether we should be looking over our shoulder at who was coming on to our register and what their motives might be."
Solid Energy was expanding on several fronts – renewable energy, lignite, underground coal gasification, coal seam gas and biofuels – and was looking at investment of $5-10 billion in the next decade.
It did not make sense for the Crown to provide that sort that sort of equity, and it did not make much sense for Solid Energy either, Mr Palmer said.
But if capital came from the markets, which could be done in a number of different forms, the advantage for the Crown was that the company could be expanded with no fiscal drain. It would also provide a considerable opportunity for investors.
